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EUR/USD – 1H.
Good afternoon, dear traders!
On February 8, the euro/dollar pair reversed in favor of the euro and continued rising. Today, the pair closed above the 127.2% Fibonacci level located at 1.2072. Thus, the pair may continue rising towards the 100% correctional level located at 1.2131. Meanwhile, businessmen and economists of the European Union appealed to the European Central Bank with a request to write off a certain part of the debts controlled by it. An open letter to the ECB says that the regulator can provide funds for recovery under the "green program" and can help overcome the social and economic crisis caused by the COVID-19 pandemic.
However, the EU officials do not like this idea. They remind economists that the EU charter does not imply debt cancellation. Moreover, such a decision must be approved by all 27 EU countries. This seems almost impossible. The EU officials also emphasize the fact that the EU countries have recently agreed to create a recovery fund. That is why now they have to form it and not to write off debts. ECB Chair Christine Lagarde neither supports the proposal. She supposes that the economic recovery is based on investments and not on the cancellation of debts. The key aim is to make the EU countries stronger than they are now.
EUR/USD – 4H.
On the four-hour chart, we can see that bulls are gaining control over the market. On the one-hour chart, the price has already closed above the channel. At the same time, on the four-hour chart, it may close above the trend line. This will change the market sentiment for bullish. Thus, two charts with the smallest time frames give us hope that the euro will continue growing towards the 200.0% correctional level located at 1.2353. However, the price may still drop after reaching the trend line. In this case, the market will remain bearish and the price may inch down.
EUR/USD – Daily.
On the daily chart, the euro/dollar pair closed below the lower limit of the channel. Thus, the third chart points to the fact that the quote may decline in the near future. The price is likely to slide towards the 261.8% correctional level located at 1.1822. This contradicts the one-hour and even four-hour charts.
EUR/USD – Weekly.
On the weekly chart, the euro/dollar pair consolidated above the narrowing triangle. This proves that the pair will gain in value in the long term.
Macroeconomic calendar for the US and the eurozone:
On February 9, the eurozone macroeconomic calendar was absolutely empty. At the same time, the US published important reports. However, they failed to support the US dollar.
News overview
On February 9, there are no economic events in the US and the eurozone. Thus, today, news will not influence currencies.
COT report (Commitments of traders):
Last Friday, a new COT report was unveiled. Economists were really surprised. During the previous week, the euro was losing in value. This explains the weakness of the bullish sentiment among non-commercial traders. However, in the given period, speculators closed 23 thousand long contracts and 11 thousand short contracts. Thus, the sentiment became really bearish. Nevertheless, a rise in the euro on Friday and early this week proves that speculators were in a hurry to sell off the euro.
Outlook for EUR/USD and recommendations for traders:
It is possible to buy the euro with the target at 1.2131 and 1.2182 on the one-hour chart, if the price closes above the downward trend line on the four-hour chart. Sell positions could be opened after a rebound from the trend line on the four-hour chart with the target at 1.1996 and 1.1913.
Terminology
"Non-commercial" traders are major market players such as banks, hedge funds, investment funds, private, and large investors.
"Commercial" traders are commercial enterprises, firms, banks, corporations, companies that buy foreign currency not for speculative profit, but to support current activities or export-import operations.
"Non-reportable positions" are small traders who do not have a significant impact on the price.
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